Ekuinas plots Q4 launch of fourth fund

The Malaysia government-backed mid-market firm wants to raise close to $400m for its latest offering.

Malaysia government-backed private equity firm Ekuinas is planning to launch its fourth fund by the end of this year, Private Equity International has learned.

Fund IV will have the same target as its predecessor, the 2014-vintage Ekuinas Direct (Tranche III) Fund, which raised 1.5 billion Malaysian ringgit ($370 million; €320 million) and is about 80 percent deployed, Ekuinas chief executive Syed Yasir Arafat Syed Abd Kadir told PEI.

Commenting on the fund size, Syed Yasir Arafat said: “We need to be careful as most of our peers are raising larger and larger funds, and there’s the danger of too much dry powder into very few deals.”

Fund IV will follow the same strategy as Ekuinas’s earlier vehicles, focusing on buyouts and growth capital in the Malaysian market and with a typical ticket size of between $10 million and $100 million.

Syed Yasir Arafat said that the firm is looking to focus more on deals in the digital economy and advanced manufacturing. He added that healthcare and education continue to be prize assets in this region because the two sectors are directly linked to rising affluence and have more mature assets and lower barriers to entry, compared with consumer products acquisitions.

The firm completed two deals last year, acquiring lighting manufacturer Davex for 255 million Malaysian ringgit, its largest deal in the manufacturing sector, and Flexi Versa Group, based on an enterprise value of 330 million Malaysian ringgit.

Last year Ekuinas also sold its full stake in education provider Tenby Education Group to International Schools Partnerships, generating a 45.7 percent net internal rate of return in Malaysian ringgit, as well a APIIT Education Group to South-East Asia-focused private equity firm KV Asia Capital, delivering a 22.3 percent net IRR.

Ekuinas’s debut fund, the 2010-vintage, 1 billion Malaysian ringgit Ekuinas Direct (Tranche I) Fund generated a gross IRR of 10.1 percent for FY 2017 and a money multiple of 1.5x. Fund II delivered a gross IRR of 14.6 percent, while Fund had a gross IRR of 10.7 percent, according to the firm’s latest annual report.

From 2010 to 2017, Malaysia-focused funds raised $1.8 billion or 13.2 percent of the South-East Asia’s fundraising total. Investments in the country made up 16.9 percent or $6.2 billion of overall deal values in the region for the same period, according to the report.